A technical look at the market right now should be very heartening for the bulls, argues Mike O’Rourke at BTIG:
The improving technicals don’t end with short interest. The S&P 500 moved back into positive territory for the year and once again climbed above its 200 day moving average. The index is closing in on that important 1128-1130 resistance level. The 1128 level was the close on the day of the flash crash. On that note, today the Vix hit its lowest level today since the day of the flash crash. The 1131 level was the intraday peak of the June rally and the truncated right shoulder of what appeared to be a potential Head & Shoulders top. The July rally peaked out in August at a high of 1129 the day before the FOMC meeting. As we noted on that day, the only closes the S&P 500 has registered above 1130 since the flash crash were immediately after the announcement of the EU’s “Shock & Awe” backstop that weekend. The importance of this level is rising because now it has also become the neckline for a Head & Shoulders bottom.
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